China’s overall debt load has risen quickly since the global financial crisis. While still manageable, it raises some concerns for investors, the McKinsey Global Institute says in a new report.

The prospect of a major economic slowdown in China is among the key concerns for policy makers and investors in a turbulent global outlook. Many believe the Chinese government has the resources to manage a smooth transition to a slower growth rate without causing a financial crisis.

But the speed of Chinese debt growth, much of it related to real estate, raises risks that an unwinding of the country’s two-decade growth boom might not go down so smoothly.

Here are some key facts from the report.

Total Debt Equals 282% of GDP: That’s how big China’s total debt load, including borrowing by the government, banks, corporations and households, had gotten by the middle of 2014, the report says. That’s far above the average for developing countries and higher than some advanced economies including Australia, the United States, Germany and Canada.

One-Third of Global Debt Growth: China’s economy, the world’s second-largest, has added $20.8 trillion in new debt since 2007, accounting for more than a third of total debt growth globally in that period.

Corporate Debt Soars, Especially in Real Estate: The largest driver of this growth has been borrowing by non‑financial corporations, including property developers. At 125% of GDP, China now has one of the highest levels of corporate debt in the world.

Shanghai or New York?

After a steep rise in property values in recent years, some high-end real estate prices in Beijing and Shanghai are starting to approach those of Paris and New York.

The three major risks identified in the McKinsey report:

1. About half the debt of households, non-financial firms and government is either directly or indirectly linked to real estate.

2. Rapid growth in lending by local governments, “many of which may not be able to repay”

3. Around a third of total outstanding debt in China is provided by a highly opaque shadow banking system, made up of various forms of non-bank lending.

“A plausible concern is that the combination of an overextended property sector and unsustainable finances of local governments could result in a wave of loan defaults in China, damaging the regular banking system and potentially creating a wave of losses for investors and companies that have put money into shadow banking vehicles,” the report says.

While damaging to economic growth, the Chinese government “could probably bail out the financial sector even if default rates were to reach crisis levels,” the McKinsey Global Institute said. “This would most likely prevent a full-blown financial crisis.”

February 28, 2015: For the third year in a row Japan has increased its defense budget, this time to $41 billion. Japan is also striving to generate enough popular support for changing the laws that govern the aggressive use of its military. The most recent motivator for this was the recent execution of two Japanese citizens by Islamic terrorists (ISIL in Syria). Longer term the Japanese are becoming more alarmed at increasing Chinese military activity in waters and air space around Japan. It’s not just disputed areas, especially the Senkaku Islands, but around distant Okinawa and increasingly east of Japan, in the Pacific. Operating out there is what the Chinese would have to do for a blockade of Japan.

As a result of all this Chinese naval and air activity, there is growing support for expanding the Japanese military, especially obtaining long range UAVs for maritime patrol and ballistic missiles for hitting Chinese bases in the event of hostilities. This doesn’t bother China as much as constant Japanese chatter about developing nuclear weapons. But the Chinese believe that decades of anti-nuke militancy would prevent Japan from actually going down this road. If Japan did build nukes, it would again make Japan very to most Chinese and that could cause a really dangerous situation.

The three largest procurement in the new budget are twenty P-1 Maritime patrol aircraft, more Aegis destroyers and the first six F-35 fighters. Currently Japan has 245,000 troops. Most of the troops are in the army which has eight divisions and two air mobile brigades. Troops have 800 tanks and over 1,000 other armored vehicles plus 110 helicopter gunships and nearly 500 other helicopters (mostly transport). The navy has 18 subs and 49 surface warships while the air force has 372 combat aircraft.